Tip of the Week: Choose your tax preparer carefully

Friday

Feb 29, 2008 at 12:01 AMFeb 29, 2008 at 6:36 AM

Almost a third of complaints against tax preparation companies allege the preparer made an error or mistake in the tax return, often requiring the consumer to pay fines or added fees, according to a Better Business Bureau analysis.

Almost a third of complaints against tax preparation companies allege the preparer made an error or mistake in the tax return, often requiring the consumer to pay fines or added fees, according to a Better Business Bureau analysis.

“Few things are as certain as death and taxes, but it’s also true that few things are as scary -- that’s why more than half of the 120 million American taxpayers enlist the help of a tax preparer every year,” said spokesman Steve Cox. “However, many consumers end up being held responsible when their tax preparer makes mistakes or errors on their return, and this can mean fees and fines adding up to thousands of dollars that they owe to Uncle Sam.”

Another 19.5 percent of complaints allege the tax preparer was simply unresponsive. Typically, the tax preparer did not return repeated calls or attempts by the complainant to get assistance, answers to questions or copies of their tax information.

Many complainants noted that they were frantic as they faced filing deadlines or audits and were not receiving any help from their tax preparer.

Disputes over billing accounted for 19 percent of complaints. Consumers often were shocked when they received a high bill for having their taxes prepared or felt that they did not receive the level of service they paid for.

Almost 7 percent of complainants said the company was rude, and 6 percent of complainants say they didn’t receive their refund. Unfortunately, and perhaps most shocking, 6.3 percent of complainants allege that the tax preparer never filed their tax return at all.

“Consumers looking for trustworthy help filing their taxes should not wait until the last minute -- they need to take their time, shop around and find a preparer who is both qualified and has a strong track record of providing customer service,” Cox said. “Some consumers who rushed through the process in 2007 are still dealing with the mess their tax preparer made as they head into the 2008 tax season.”

In 2006, the Government Accountability Office did a limited study of commercial tax preparation chains in major metropolitan areas, and found all the returns completed in those offices were wrong in one way or another.

The report cited mistakes such as not reporting business income, failing to take the most advantageous education tax benefit, failing to itemize deductions and, in some cases, even failing to claim available deductions.

When the IRS detects a false return, the taxpayer -- not the tax preparer -- must pay any additional taxes, interest, fees and penalties, because the taxpayer is responsible for all information submitted to the IRS.

The bureau encourages consumers to ask around and get referrals from friends and family on who they use, and check the BBB Reliability Report on tax preparation services free-of-charge at www.bbb.org

OTHER TIPS

- Look for credentials. Ideally, tax preparers should either be a certified public accountant, a tax attorney, or an enrolled agent. All three can represent taxpayers before the IRS in all matters, including an audit. Also, find out if the preparer is affiliated with a professional organization that holds its members to a code of ethics.

- Don’t fall for the promise of a big refund. Be wary of any tax preparation service that promises larger refunds than the competition, and avoid any tax preparers who base their fee on a percentage of the amount of the refund.

- Think about accessibility. Many tax preparation services only set up shop for the months leading up to April 15. In case the IRS finds errors, or in case of an audit, consumers need to be able to contact their tax preparer throughout the year.

- Read the contract and know what you’re paying for. Consumers must read tax preparation service contracts closely to ensure they understand issues such as how much it is going to cost for the service, how the cost will be affected if preparation is more complicated and time consuming than expected, and whether the tax preparer will represent the consumer in case of an audit.

- For more advice from the bureau on tax preparation, visit www.us.bbb.org